How I Upsold $30M of Recurring Revenue by Reversing the Price Ep 321

Summary Notes


In a discussion focused on optimizing service business strategies, the speakers, including an entrepreneur with a company making just under $100 million a year, dissect the benefits of offering defined outcome-based programs over traditional recurring fee models. They argue that customers prefer outcomes to memberships, and by packaging services with a clear end and promise, businesses can command higher upfront prices, which in turn allows for greater marketing spend and customer acquisition. This strategy also sets a price anchor, making subsequent continuity offers seem more affordable, and it aligns with customers' preference for manageable cash flow over lump sum payments. Additionally, higher prices attract more committed customers, improving the overall quality of the product and service experience. They conclude by emphasizing the importance of creating an upfront program to attract customers, cover onboarding costs, and ultimately enhance the value provided, leading to increased revenue.

Summary Notes

Introduction to Customer Ascension Strategies

  • The focus is on how to attract more customers, increase customer value, and retain them.
  • The conversation includes failures and lessons learned in the process.
  • Emphasis on the importance of structuring offers to ascend customers.

Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe.

This quote sets the stage for the discussion, highlighting the podcast's aim to educate on customer acquisition, value maximization, and retention, along with learning from past mistakes.

Structuring Offer Flows

  • Speaker C introduces the concept of structuring offer flows to ascend customers in various business models.
  • The approach involves moving away from the standard recurring fee model to a more effective strategy.
  • Speaker C emphasizes the importance of selling outcomes over memberships or recurring services.

In this video, I'm going to show you how we've structured our offer flow to ascend customers.

Speaker C is about to explain their strategy for improving customer ascension, which is applicable to a range of service-based businesses.

Downsells and Upsells

  • Speaker C advocates for the strategy of "Downsell your upsell" and shares the success of their companies.
  • The strategy is positioned as a way to avoid the pitfalls of the recurring fee business model.
  • Speaker C's motivation for sharing this advice is to help entrepreneurs avoid financial failure.

So one of the things that I've been touted has been mine is Downsell, your upsell. And that's because our current companies make just under $100 million a year.

The quote reveals Speaker C's successful business strategy and their credentials, setting the stage for the credibility of their advice.

Selling Outcomes Over Memberships

  • Speaker C criticizes the traditional model of signing customers up for recurring fees.
  • They argue that customers are more interested in purchasing a defined outcome rather than a subscription.
  • The strategy involves selling an upfront program with a clear promise of results.

Here's why you're making a mistake, and this is why I've never done that model, because I think it's horrible.

Speaker C expresses a strong opinion against the recurring fee model, suggesting it is a flawed approach to customer retention and ascension.

So if you have a defined end program on the front end, what you'll be able to do is sell more easily because people don't want a membership or recurring service, they want an outcome.

This quote highlights the advantage of selling a defined program with an end goal, which is more appealing to customers than ongoing memberships.

Packaging and Pricing Strategies

  • Speaker C suggests packaging the service as an upfront program with a promise, which allows for an increase in price.
  • The defined period and promised outcome justify the higher price point for customers.

Now, when we do that, we're able to increase the price because it's a defined period of time and because it has a promise that we're delivering on.

Speaker C explains that by offering a program with a specific time frame and outcome, businesses can command a higher price, as the value is clearer to the customer.

Value Perception in Pricing

  • Perceived value can be higher for one-time purchases compared to recurring services.
  • Customers are often more willing to make a single purchase rather than commit to ongoing payments.
  • A one-time higher price point can generate immediate cash flow for marketing and customer acquisition.

"I perceive it as more valuable than a recurring service. And because people are always willing to spend more one time than they are on a recurring basis, because it's not a commitment for perpetuity."

The quote highlights the speaker's belief that customers value one-time purchases more favorably than recurring services, as they avoid long-term financial commitments.

Easier Sales and Customer Acquisition

  • Selling a one-time product or service is generally easier than selling a subscription.
  • The initial high price point provides cash flow for further investment in customer acquisition.
  • The strategy can be to break even on the first sale with the intention of selling continuity services later.

"So one, it's an easier sale. Number two is that you actually are able to acquire more customers this way because you have cash flow from this higher price point to spend more on marketing."

This quote explains that the ease of making a one-time sale and the subsequent cash flow can be leveraged for marketing to attract more customers.

Anchoring Value and Perceived Discounts

  • Raising the price of a front-end product or service can anchor its value for the customer.
  • When continuity or subscription services are introduced later, they seem cheaper in comparison, creating the illusion of a discount.

"The next thing is that if you raise the price on this front end defined period, it will actually anchor the value of your services in the mind of your prospect, so that when you do sell your continuity, it feels like a downsell, even though you're actually selling a bigger ticket."

The quote discusses how a higher initial price can set a value benchmark, making subsequent offers appear more affordable.

Cash Flow vs. Price Sensitivity

  • Customers tend to be more sensitive to cash flow implications than the total price.
  • Smaller, recurring payments are often more palatable than a large lump sum, even if the total cost is higher over time.
  • This psychology can be used to structure pricing in a way that seems more manageable to customers.

"The cash flow more than the price. So, for example, if I say, hey, it's $18,000, someone would go, whoa. But if I say, hey, it's one 5000 hundred dollars a month. And it's like, oh, that's not so bad, right?"

This quote illustrates how customers react differently to a large one-time fee versus smaller, recurring payments, preferring the latter due to its impact on cash flow.

Sales Strategy and Continuity Integration

  • A high upfront cost can be part of a sales strategy that leads into a continuity program.
  • This approach makes the continuity offer seem like a natural progression and a better deal after the initial purchase.

"It's probably easier. I guarantee you this. It is easier. And you will sell more people at $1,500 a month than you would by $10,000.01 time upfront."

The quote suggests that it's easier to sell at a lower monthly rate than a high one-time fee, supporting the strategy of using high upfront costs to lead into a continuity program.

Pricing Strategy

  • Discusses the importance of pricing services in a way that seems like a good deal to customers.
  • Emphasizes the value proposition of offering more for less.
  • Suggests that by offering a superior service at a lower cost, customers will perceive it as a steal.

"This is a steal. Especially if you actually give them more than what they currently just got for less."

  • This quote highlights the strategy of providing greater value at a lower price to make the offer appear highly attractive to customers.

Marketing and Promotion

  • Talks about using unreleased content to create hype for an upcoming product.
  • The speaker is leveraging the release of a lost chapter to promote "100 million dollar leads."
  • The content is given for free in exchange for an email, which is a marketing tactic to build a customer base for future launches.

"I'm releasing it now transparently. I'm doing that to build hype for 100 million dollar leads."

  • This quote explains the speaker's intention behind releasing previously unreleased content: to generate excitement and anticipation for a new product.

Customer Acquisition

  • Onboarding new customers is expensive and requires significant effort.
  • The speaker prefers to make money from acquiring customers rather than going negative.
  • Overdelivering to new customers is seen as a way to cover onboarding costs.

"It costs more to onboard a new customer. New customers require more attention, they require more effort."

  • This quote underscores the high cost and effort involved in onboarding new customers, emphasizing why overdelivering can be beneficial.

Customer Commitment

  • Raising prices can lead to more committed customers.
  • The speaker believes that increasing the quality of prospects will improve the quality of the product.
  • Higher prices can filter for more dedicated and serious customers.

"And then finally you'll actually get more committed customers because the more you raise the price, the more committed they will be to executing it."

  • This quote suggests that higher prices can act as a filter for customer commitment, with the idea that those willing to pay more are more likely to be dedicated to using the product or service effectively.

Quality of Product and Service Delivery

  • The effectiveness of a product or service is impacted by the customer's ability to utilize it.
  • High-quality prospects increase the likelihood of achieving desired outcomes.
  • Enhancing barriers to entry can inadvertently raise the quality of the service.
  • A more selective process results in delivering more value, which can be counterintuitive.

Because if I had an identical product or identical service and I had a very able person go through it and a very unable person go through it or a disabled person go through it.

This quote highlights the importance of the customer's capability in the success of a product or service.

For the high quality prospect is much higher.

This quote implies that prospects with higher capabilities or qualifications are more likely to achieve success with the product or service.

And so by raising the barrier, we increase the likelihood of achieving the outcome that we're shooting for, which means that by its very nature, our service becomes more valuable.

This quote explains how increasing the entry requirements for a service can lead to a higher success rate and thus make the service more valuable.

Business Strategy for Customer Acquisition

  • Recommends against selling continuity services upfront.
  • Advises creating an initial program that generates customers and covers acquisition costs.
  • The initial program should be easy to sell with a defined end.
  • The initial cost can serve as a price anchor, making subsequent continuity offerings seem more valuable.
  • By pricing continuity less than the upfront program, businesses can improve cash flow and customer satisfaction.
  • The strategy leads to acquiring more committed and higher-quality customers, increasing overall market value.

All right, so I'm going to bring us home here. So right now, in your current service, if you sell some sort of continuity, I'd highly recommend you not do that and instead create the upfront program that creates customers.

This quote advises businesses to focus on creating an initial customer-generating program rather than selling ongoing services upfront.

It will cover your cost of acquisition and probably profit from it. You will have a price anchor for your continuity that will make it more valuable and the perception of that more valuable.

This quote explains that the initial program will not only cover customer acquisition costs but also establish a perceived value for future services.

And you'll actually be able to raise the price on your continuity because the.

Cash flow on that continuity be less.

These quotes suggest that businesses can charge more for continuity services if the initial program is priced higher, improving cash flow.

Than what they were required to pay up front. You'll be able to cover your onboarding costs and create an amazing customer experience so that you get them super up to speed, really believing that your business is amazing and can deliver on the promise you've made.

This quote emphasizes the financial and experiential benefits of charging more upfront, allowing for better onboarding and customer experience.

And then finally you'll have more committed customers that are higher quality.

This quote indicates that the strategy will result in a customer base that is more committed and of higher quality.

Call to Action

  • Encourages engagement and subscription without the intent to sell anything.
  • The goal is to help listeners improve their business and profitability.

And so if you found this interesting or you found this valuable in your business, click the subscribe button. I have absolutely nothing to sell you. I just want you to make money in your business.

This quote is a call to action for listeners to subscribe, emphasizing that there is no sales pitch involved, only the desire to help listeners succeed in their businesses.

This and I'll see you in the next vid. Bye.

This quote concludes the conversation, indicating an end to the discussion and setting up anticipation for future content.

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